1. In Problem 1, if Charlie's utility function were X5AXB, if apples cost 70 cents each, and if bananas cost 10 cents each, Charlie's budget line would be tangent to one of his indifference curves whenever
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a.
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5XB = 7XA.
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b.
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XB = XA.
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c.
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XA = 5XB.
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d.
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XB = 5XA.
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e.
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70XA + 10XB = M.
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2. In Problem 1, if Charlie's utility function were X2AXB, the price of apples were pA, the price of bananas were pB, and his income were m, then Charlie's demand for apples would be
3. Ambrose's brother Anthony has an income of $75 and a utility function U(x1, x2) 20x1/2 + x2. The price of good 1 (nuts) is $2 and the price of good 2 (berries) is $1. How many units of nuts will Anthony demand?
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a.
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35
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b.
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21
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c.
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23
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d.
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25
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e.
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48
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4. Ambrose's brother Augustine has an income of $52 and a utility function U(x1, x2) 18x1/2 + x2. The price of good 1(nuts) is $3 and the price of good 2(berries) is $1. How many units of berries will Augustine demand?
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a.
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25
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b.
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9
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c.
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50
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d.
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15
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e.
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There is not enough information to determine the answer.
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5. In Problem, recall that Miss Muffett insists on consuming 2 units of whey per unit of curds. If the price of curds is $5 and the price of whey is $6, then if Miss Muffett's income is m, her demand for curds will be
6. In Problem recall that Casper's utility function is 3x + y, where x is his consumption of cocoa and y is his consumption of cheese. If the total cost of x units of cocoa is x2, the price of cheese is $8, and Casper's income is $184, how many units of cocoa will he consume?
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a.
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9
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b.
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12
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c.
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23
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d.
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11
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e.
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24
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